From now on, Employee will not have to submit proofs as evidence, to their employers for getting LTA (leave travel allowance) reimbursement.
Supreme court of India gave ruling that employers, while reimbursing LTA claims of their employees, are under no statutory obligation to collect evidence and provide them to tax authorities.
As per Income tax rules of India, if transport bills for LTA are not provided, the amount will be taxed. E.g. If an employee has LTA allowance as Rs 50,000 in his CTC(cost to company), and he provides proofs of Rs 40,000 (boarding pass, air tickets, taxi vouchers) then income tax will be deducted for rest of the Rs 10,000. Does not matter whats the amount of LTA in an employee’s package, income tax laws only permits domestic air tickets only for LTA claim.
This court order came after a hearing of case between Larsen & Toubro and income tax department of India. Income tax department had argued that employer has to collect proofs from employee for LTA. Rejecting this, the supreme court in its order said: “The beneficiary of exemption under Section 10(5) (of the Income Tax Act) is an individual employee. There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under Section 192 to collect and examine the supporting evidence to the declaration to be submitted by an employee(s).”
Here is the link to court appeal
This is a factual account. Every date and quote below is from written correspondence I…
Every year around July–August, the same ritual: open the Income Tax Department's offline ITR utility…
In my previous update on cross-border investing, I broke down how I secured a zero…
In my last finance update, I documented the exact timeline of executing my very first…
Introduction: Most bank customers accept a credit card rejection as "final." But what happens when…
After spending quite a few days researching platforms and figuring out the best way to…
View Comments
Pankaj,
One more question regarding LTA - I traveled to Kathmandu for Thursday - Sunday through Spice Jet and within these days I again took additional flight of mountain view. Please suggest if this Journey - Delhi -> Kathmandu (another domestic flight within Kathmandu) -> Delhi will be eligible for LTA? If Yes, can it also include the lodging charges since it was a package deal.
Let me know!
@Varun
As per income tax rules, LTA exemption is only available for travel done within India. Tour to any other country won't be considered.
hiiii Pankaj,
I had a query regarding LTA. 1 of my employee is claiming an LTA of RS. 45000/- in 2 years. The actual LTA in his CTC is 25000 p.a.
He his also providing the proof of his travel ( which is not pertaining to travel expense incurred in India i.e. relating to foriegn travel ).
So,
1. Shall i pay him that amt ?
2. On what amount should i deduct the Tax ?
@Gaurav
1. LTA exemption is not allowed for travel done outside India.
2. Its your company's decision whether to pay two year's LTA mount together. Generally companies clear accounts by 31st March every year and if someone has not claimed LTA, he is paid amount after deducting taxes, hence there is no carry forward of amount.
@ Mr. Pankaj,
If one want to claim LTA, once in a two year slab (2011-2012) and wish to travles in both the CY 2011 & 2012 to makeup for the total LTA amount , can he combine the two travel bills and cliam LTA at the end of CY 12 to get IT exemption? Or only latest year LTA bill is valid? Request you to clarify on this. Thanks!
@Ravindra
Expenses from two different travels cannot be combined for LTA exemption. At one time only a single travel has to be claimed.
Thank you Sir!
SIR
I AM regular employee i did not take lta from my company from last four year can i get
the same with out travel leave. And now i am going to my home for 6 days so can i take the LTA.
@Wahid
You can claim LTA exemption if your salary structure have component for same.
Any travel in India can be claimed for same.
dear mr batra i pay 2600 to our employee as a LTA then at the time of deducting tds could i get exemption from 2600*12=31200 or not?
@Amit
If you have traveled in India on holiday trips with/without your family, you can claim tax benefit for LTA portion twice in a block of four years.
could any one please help me
here is a salary detail of an employee
basic 14000
hra 7000
LTA 2800
medical 1250
transportation 800
internet excess allowance 800
telephone calls allowance 500
special performance payout monthly 2400
professional enrichment allowance 450
gross salary is 30000/- per month
please tell me how would i compute tax liability for f.y.11-12(a.y. 12-13)
and do we get exemption on HRA,Medical , transportation, and any other allowance?
tell me in detail please.......
@Amit
You can download and use income tax calculator on this page: http://www.pankajbatra.com/india/income-tax-calculator-india-2010-2011-2012/
Hi Pankaj,
Hope all is well at your end. I wanted to understand this from the perespective of VPF. Is there any administration charges 1.10% that are to be borne by the employee in VPF?
Your advice will be appreciated.
Warm Regards,
Lakshay
@Lakshay
I am not sure if VPF attracts administration charges.
Please consult your employer for same.
Hi Pankaj,
I understand that my question does not pertain to the subject of the discussion here. However, i will be grateful if you can please help me out with the query.
Hope to hear from you.
Warm Regards,
Lakshay
Hi Pankaj,
During Oct 11 I had travelled from Nashik to Nagpur approx. 1500 km to and fro, by my car. in 6 days. I have fuel bills worth approx. 7000/- How much LTA rebate can I claim / which IT rule is applied to this ?
@Mangesh
Maximum LTA exemption which can be availed is fare on public transport (bus, train or airline) on shortest distance between cities.
No matter how much you have spent, max benefit you can take is this only.
Also, petrol bills with your own car are not a valid proof of travel. Bus/Train/Air tickets would be considered in case public transport exists, else travel bill from a taxi agency would be needed.
Hi Can we need to Submit LTA Proofs to avail tax exemption, My Employer insisting me to provide Proofs Please clarify. thanks
@Babu Kanigiri
As per court ruling employer has no right to collect proofs for travel, but still some employer insist for same.
Hi Pankaj,
I travelled to Andaman Islands in January 2011. But in July 2011, I switched to another company. My question is that can I avail LTA exemption at this point of time through existing company. I have e-ticket and boarding passes with me.
Moreover, please let me know, let say for example if we are going to Jaipur by train and hire a cab there to roam in and aroun Jaipur and comes back by train to hometown. Can I claim LTA against train ticket and taxi bill.
thanks and Regards,
Mohit
@Mohit
Existing company cannot provide LTA benefit for a time period in which you were not employed with them.
You won't be able to claim for taxi bills for site seeing. LTA would only be applicable for connection between two cities. Train ticket to and from Jaipur would be considered for LTA claim.
hI ,
i Worked in TCS FOR 4 YRS(June 2007 June 2011).I never claimed for LTA.Currently working in CGI. this febraury planning for a trip with family.
where can i apply the LTA bills. Is there any chance of getting the tax benefit
(if amount is more than than i can claim in CGI)
@Rajesh
If your salary structure in current company has LTA component, you can claim for same. Company would pay you max only that amount which is there in your annual CTC.
You need to provide a claim form to your employer. Max amount non taxable in claim would be shortest distance fare on places visited on public transport like train, bus or airline fare.
Hi Pankaj,
Nice to see your comments on LTA exemption rules, i have few queries regarding same.
Since 7 yrs of my carrer i never claimed for LTA, now the LTA period 2010- 2014, in this period also i have not claimed for LTA, now my questions are as follows:
1. Can i cliam the amount which i have travelled in 2010 May during my marriege
as a LTA for the financial year 2011-2012 (i have changed my company in the
month of Sept 2011) ?
2. How do i carry farward my LTA from 2011-2012 to 2012-2013 ?
3. Can i claim the 2011 travels bills in Financial year 2011-2012 ?
4. Can i claim the 2012 Jan travel bills in financial year 2012-2013 ?
Please do the needful.
Regards,
Rekha
@Rekha
1. As you have changed the employer, so you cannot claim for travel done before joining current employer with current one. If you wanted to claim, you should have done it with earlier employer.
2. Current block of LTA is Jan 2010-Dec 2013, you can claim twice now before Dec 2013.
3. Yes, you can claim travel bills from 2011 in FY 2011-12. But travel period should lie within period of employment with current employer.
4. As LTA rules are based on calender year, you should be able to claim Jan 2012 bills in FY 2012-13. But most of the companies try to align it with financial year and may not accept same.
Thanks a ton for your prompt reply.
I have one more query:
I am not having suffient amount of Travel Expenses to claim for full amount of LTA for this financial year (2011- 2012), so i wanted to carryfarward the remaining amount to next calender year or financial year will it be possible ? If Yes, please provide me the process for it.
Ex: If am eligible for 20K LTA and i have a actual expenses are 15K, so the remaining amount will be 5k, can i carryforward for next financial year this remianing amount as the next financial year falls under current block.
Thank you once again.
Rekha
@Rekha
If LTA is a part of your package structure (CTC), then generally employer pay the amount after deducting taxes if claim is not made.
So lets say, you have 20,000 as LTA amount in CTC and you claim only for Rs 25,000 then company will pay you 35,000 as non taxable and 5,000 as taxable income.
Few companies may carry forward unclaimed LTA amount to next year and pay bigger amount at once next year. For this, you would need to ask your employer.
hi.pankaj please tell me , i receive 2800 per month as LTA from employer
and from this month my employer is going to deduct tds on salary,so could i claim for exemption of LTA at the time of TDS decuction? if yes then i have to to produce the LTA proof to employer or not?
pls tell me as soon as possible ..thanks.
.
@Amit Jha
If you won't submit LTA claim till prescribed time with your employer, they will deduct TDS on whole amount.
As per supreme court judgement employer have no right to collect LTA proofs, but most of the employer still collect that.
Ideally a simple LTA reimbursement claim with detail of travel (place traveled, air/bus/train fare amount) should be enough.